INVESTMENTOPPORTUNITY

Grade A BREEAM ‘Excellent’ Landmark Office

• Landmark office building completed in 2014, extending to 3,787.07 sq m (40,764 sq ft) and 84 car parking spaces.

• Let to Neptune E&P UKCS Limited, part of Neptune Energy Group – one of Europe’s largest independent exploration and production companies.

• The property is let on FRI lease terms expiring 11th May 2029 (9.36 years unexpired).

• The passing rent is £1,360,561 per annum, subject to 5 yearly reviews to the higher of OMRV or 2.5% per annum compounded.

• Heritable interest (Scottish Equivalent of English Freehold).

• Offers over £15,250,000, exclusive of VAT reflecting a net initial yield of 8.36% assuming standard purchasers costs and LBTT, and rising to 9.46% in 2024.

EXECUTIVESUMMARY

DUNDEEPERTH

STIRLING

ABERDEEN

INVERNESS

GLASGOW

EDINBURGH

A90

A96

A82

A9

A9

M8

A92

M80

Aberdeen is Scotland’s third largest cityand is the energy capital of Europemaking it one of the most prosperousbusiness focussed cities in the UK. Thepopulation of the city is estimated at220,000 people with a catchmentpopulation in excess of 500,000.

• Output per worker in Aberdeen (£62,500 per annum) in Scotland is second only to Edinburgh (£68,150 per annum) and also beats other UK regional cities including Manchester, Leeds and Bristol.

• £2.5 billion of public and private investment has been delivered during 2018 – 2020 with over £10 billion committed to the region over the next 10 years. • Aberdeen Western Peripheral Route (AWPR) completed in February 2019, which was Scotland’s largest construction project and has significantly improved commuter journey times in and around the city.

• A second harbour port is under construction and due for completion in 2021.

• Aberdeen is set to become Scotland’s first city in which nearly every home and business will have access to gigabit-speed broadband.

ABERDEEN

Aberdeen has been at the forefront of the British offshore energy industry since the 1970s and is widely recognised as the energy capital of Europe. Leading oil and gas companies operating from regional headquarters in the city include BP, Shell, Total, Repsol Sinopec, TAQA, CNOOC Petroleum and Apache. In the last two years a wave of new private equity backed investment has burst onto the scene. More than $12bn of private equity money poured into the UK North Sea backed by some of the biggest names in the industry. Private capital investment has reshaped the asset ownership landscape, with significant resources shifting from the supermajors to specialist operators focussed on increasing returns from technically challenging wells and new discoveries. This is extending the life of the industry as new entrants develop ways to operate more efficiently. According to analyst Wood Mackenzie a further $13bn of private equity investment could be deployed in the market. With a lower cost base independents can consolidate around existing hubs, maximise production, drive innovation, increase recovery and reduce decommission spend.

ABERDEEN’SENERGY SECTOR · Oct 2018 - North Sea investment reached

3-year high, totalling £3bn in 2018 and the highest level since 2015.

· Nov 2018 - Azinor Catalyst discovers oil reserves estimated at around 15-50 million barrels of recoverable resources in the Northern North Sea.

· Dec 2018 - Shell approves a revamp of the Shearwater platform to the east of Aberdeen. Shell’s partners in Shearwater are BP and Exxon Mobil.

· Jan 2019 - Chinese state-owned company CNOOC made a gas discovery - equivalent to 250 million barrels of oil - in its Glengorm project, east of Aberdeen.

· Feb 2019 - Ineos plans to pump £500m into key North Sea pipeline.

· March 2019 - O&G Authority reports highest barrel of oil (boe) per day produced since 2011 and increased projections up to 2050.

· April 2019 - Chyrsaor announce plans to buy Conoco Phillips North Sea assets in £2 billion deal, the acquisition makes Chrysaor the largest net producer in the UK.

· July 2019 - RockRose completes acquisition of Marathon Oil’s North Sea operations, in a deal worth £75.1 billion.

· August 2019 - Aberdeen Harbour hails surge of imports thanks to the rising oil price bringing a 23% increase on forecasted profit.

· October 2019 - The Oil and Gas Technology Centre declares up to £130million co-invested to date in tech projects.

RIVER DEE

RIVER DON

ABERDEENINTERNATIONAL

AIRPORT

ABERDEENHARBOUR

ABERDEEN

NORTH SEAA96

A947

LANGSTRACHT

NORTH DEESIDE ROAD

NORTHANDERSON

DRIVE

A90

A90

A90

A90

A956

AWPR / A90

The subjects are prominently situated on North Esplanade West, within the North Dee Business Quarter (NDBQ). NDBQ is an established city centre business district within easy walking distance of Union Street. Accordingly, the development is well connected to the public transport Hub with the city’s main bus terminus and railway station in close proximity.

It offers excellent road connections with North Esplanade West, forming part of Aberdeen’s inner ring road system, providing links to the north and south of the city, Union Square, Aberdeen’s premier retail and leisure destination, offers excellent amenities to staff including many major retailers and restaurants.

The area is part of the City Centre Masterplan with proposals for a new riverside quarter connecting the North Dee with Torry waterfront by a new pedestrian bridge and a much improved riverside park and promenade.

SITUATION

GREAT W

ESTE

RN RDWILLOWBANK RD

N ES

PL

ANADE W

RIV

ERSI

DE

DR

RIVER

D

EE

HO

LBUR

N S

T

A90

ABERDEEN TRAINSTATION

UNIONSTREET

ABERDEEN CITY CENTRE

UNIONSQUARE

A90

5 MINUTES

10 MINUTES

15 MINUTES

ABERDEEN TRAINSTATION

UNION SQUARE

TRINITY CENTRE

UNION STREETUNION STREET

NORTH ESPLANADE WESTNORTH ESPLANADE WEST

MARKET STREETMARKET STREET

COLLEGE STREET CAR PARK

ABERDEEN BUSSTATION

NORTH DEEBUSINESS QUARTER

PLANNING APPLICATION FOR 258 RESIDENTIAL

FLATS

RIVER DEE

• BREEAM 'Excellent'• Suspended ceilings with metal ceiling tiles • Ceiling mounted fan coil units • Lighting to LG3/LG7 standard • Fully accessible raised access floor• Male and female toilets on each floor

DESCRIPTION

The net internal floor area as measured and agreed between landlord and tenant based on the RICS Code of Measuring Practice 6th Edition is as follows:

ACCOMMODATION

FLOOR AREA SQ M AREA SQ FT

0 144.65 1,557

1 865.29 9,314

2 944.54 10,167

3 943.79 10,159

4 888.80 9,567

TOTAL 3,787.07 40,764

The subjects comprise a detached five storey Grade A, BREEAM 'Excellent' office building of approximately 3,787.07 sq m (40,764 sq ft) completed in May 2014.

At ground level is the main entrance and reception, whilst the office accommodation is laid out in two wings over the four upper floors. Undercroft grade level car parking and open site car parking is provided for 84 cars (1:485).

• Showers on ground floor • Double height feature entrance • Roof incorporates solar panels • 2 x 1000 kg 13 person Kone lifts• Parking for 84 cars (1:485)• Cycle store

NORTH ESPLANADE WEST

PALM

ERST

ON

PLA

CE

TYPICALFLOOR PLAN

The property is leased to Neptune E&P UKCS Limited on full repairing and insuring terms for a period of 15 years from 12th May 2014 until 11th May 2029. The present passing rent is £1,360,561 per annum with reviews every 5 years to the higher of the open market rental value or 2.5% per annum compounded annually. The next rent review is therefore due on 12th May 2024 with a minimum increase to £1,539,350 per annum.

The lease contains an option in favour of the tenant to extend the lease for a further 5-year term from 12th May 2029, having given the landlord at least 12 months written notice. Where the term has been extended, the tenant shall have the option to extend the term for a further 5-year period with effect from 12th May 2034 having given at least 12 months written notice.

The tenant is part of Neptune Energy Group, one of Europe's leading independent oil and gas exploration and production companies witha regional focus on the North Sea, North Africa and South-East Asia. The group has 1,800 employees across nine countries and is backedby three strategic investors: Carlyle International Energy Partners Fund, CVC Capital Partners and China Investment Corporation. In February 2018 the business completed the purchase of ENGIE’s worldwide upstream interests (formerly GDF Suez E&P). Since then it has acquired VNG Norge AS and a sale-and-purchase agreement with Apache Corporation for two assets in the North Sea. These assets are long term - Cygnus (largest stand alone gas producing development in the UKCS) is forecast to 2040, with Snøhvit reaching forward to 2050, and there are significant future projects reaching completion which will maintain that approach. It is the leading offshore oil and gas producer in the Netherlands, one of the top five producers in Norway, third in oil and fourth in gas production in Germany. It generated $1,156m in operating cashflow in 2018 and at year end had more than $1.1b of liquidity available. Neptune E&P UKCS Ltd is a subsidiary of Neptune Energy Group Ltd.It was incorporated in 1997 and in the year ending 31st December 2018 the tenant had a sales turnover of £166,651,000 with a net profit of £28,731,000.

COVENANT INFORMATION

TENANCY

INVESTMENTPROPERTY MARKETWith a general consensus that Aberdeen’s economy has stabilised after the downturn experienced in 2015-2017, there has been a notable improvement in sentiment amongst investors. Consequently the number and volume of transactions completed across all sectors in the market has increased.Investors are attracted to the significant yield differential relative to other key UK cities.

The below table outlines the notable office investment transactions whichhave been completed in the last two years.

EPCB+.

PRICING & YIELD PROFILE

Offers over £15,250,000, exclusive of VAT reflecting a net initial yield of 8.36% assuming standard purchasers costs and LBTT, and rising to 9.46% in 2024.

CAPITALALLOWANCESCapital Allowances may be available. Further information is available withinthe Data Room.

VAT & TOGCThe property has been elected for VAT however we anticipate the transaction will be treated as a Transfer of Going Concern (TOGC) and therefore no VAT will be payable on the purchase price.

PROPERTY DATE PRICE NIY

Sir Ian Wood House, Altens Nov 2019 c. £80m c. 6.82%

TechnipFMC, Westhill July 2019 £22.4m 6.70%

Atmosphere 1, Westhill Feb 2019 £13.375m 8.68%

AB1, Huntly Street Jan 2019 £13.45m 7.85%

Thermopayle House & Teekay House, Westhill July 2018 £13.30m 7.58%

Aker UK Campus Mar 2018 £112.50m 6.92%

Statoil, Prime Four, Kingswells Jan 2018 £18.70m 6.14%

Ensco House, Aberdeen Gateway Oct 2017 £6.50m 7.34%

Lloyds Register, Prime Four, Kingswells April 2017 £41.28m 6.68%

TENURE Heritable (Scottish Equivalent of English Freehold).

OCCUPATIONALPROPERTY MARKETTenant demand for office accommodation has increased for good quality space since the beginning of 2018 as the recovery in the local economy gained momentum. There has been a ‘flight to quality’ with noticeable take-up within the city centre new build developments, The Capitol, The Silver Fin and Marischal Square, as well as refurbished office suites within Union Plaza. This has seen Grade A stock in the city centre reduce by c.35% during this time. The headline rents in the city were maintained at £32.50 per sq ft, subject to tenant incentives.

For further information or access to the Data Room, please contact the sole selling agents:

Chris Ionchris.ion@knightfrank.comTel: 01224 415 969Mob: 07717 425 298

4 Albert StreetAberdeen AB25 1XQ

Alasdair Steelealasdair.steele@knightfrank.comTel: 0131 222 9622Mob: 07808 479 333

2 Castle TerraceEdinburgh EH1 2EL

Richard Claxtonrichard.claxton@knightfrank.comTel: 020 7861 1221Mob: 07774 826 558

55 Baker StreetLondon W1U 8AN

DISCLAIMER: Knight Frank on their behalf and for the Vendors or Lessors of this property whose Agents they are, give notice that: 1. These particulars are set out as a general outline only for guidance to intending Purchasers or Lessees, and do not constitute any part of an offer or contract. 2. Details are given without any responsibility and intending Purchasers, Lessees or Third Parties should not rely on them as statements or representations of fact, but must satisfy themselves by inspection or otherwise as to the correctness of each of them. No person in the employment of Knight Frank has any authority to make any representation or warranty whatsoever in relation to this property. 3. Unless otherwise stated, all prices and rents are quoted exclusive of VAT. 4. All areas, plans and images are for indicative purposes only and subject to planning. Date of publication: January 2020.

FURTHER INFORMATION/DATA ROOM